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IFRS 16 Leases - Coggle Diagram
IFRS 16 Leases
Lessee
Optional exemptions
- short term leases < 12 months
- Low value underlying asset
Lease term interest
Rights of Use (ROU)
right to control the use of the asset;
- right to obtain economic benefits from the use of the asset
- right to direct the use of asset
initial measurement
- measured at cost + incidental cost
Lease liability (LL)
Remeasurement
only if there is changes in;
- lease terms
- purchase options
- residuIdenal value
- payment-market index
Payment in arrears
- b/d (PVFLP)
- (+) Finance cost/interest paid
- (-) Instalment paid
- c/d
-
Payment in advance
- b/d (PVFLP)
- (+) Finance cost
- c/d (Y1)
- (-) Instalment
- (+) FC
- c/d (Y2)
-
Lessor
Finance lease
- accounted as lease receivables in SOFP
- examples:
- transfer ownership by the end of the lease term
- option to purchase at price sufficiently lower than fair value
- lease term for major part of the economic life of the underlying asset
- PVFLP at inception amounts to at least substantially all of the FV of the underlying asset
- underlying asset is specialized, only lessee can use w/o major modification
- losses on cancellation borne by the lessee
- gains/losses on changes in residual value accrue to lessee
- lessee can cont to lease at subs lower price than market
Operating lease
- accounted as income in SOPL on straight line basis
-
Definition: A contract, or part of a contract, that conveys the right to use the underlying asset for a period of time in exchange for consideration.